Thursday, March 22, 2012

Larry Baer's Twisted Logic

Giants CEO and president Larry Baer today at the 2012 World Conference of Sport reiterated the team's firm stance on keeping the A's out of San Jose. The article recapping his remarks indicates that Baer believes the "territorial grant" gives the team the right to "market" to Santa Clara County. Either this is simply a misinterpretation of Baer's remarks or he does not understand what MLB territorial rights actually are.

With respect to marketing, the A's are free to erect billboards and advertise throughout the Bay Area, not just in their assigned territory of Alameda and Contra Costa counties. (For instance, a recent promotion involved the A's mascot Stomper riding from Embarcadero to Civic Center on BART in San Francisco.) Baer needs to look no further than his team's Giants Dugout store in Walnut Creek -- smack dab in the middle of the A's territory.

The only thing that territorial rights determine is who has the right to play "home" games within an area. Per the MLB constitution:

Sec. 8. Operating Territories. The Major League Clubs shall have assigned operating territories within which they have the right and obligation to play baseball games as the home Club.

Baer is quoted in the piece referenced above as saying:

For our franchise, every year we wake up and it’s a big risk,” he said. “We have to draw over 3 million fans to break even. We’ve got to squeeze everything out of our territory. We can be destabilized just by a small decrease in attendance and revenue.

He claims in it that 35-45 percent of the team's revenue comes from San Mateo and Santa Clara counties -- areas he feels the A's would siphon fans away from with a downtown San Jose park. These numbers do not seem to be such a stretch considering that the team's own demographic research show 32.2 percent of fans coming from these counties.

What is a stretch here is Baer's zero-sum mentality. In Baer's mind, there is a finite pool of baseball fans in the Bay Area. If the A's gain, the Giants lose and become unprofitable. History offers a counterpoint to Baer, however, in that the late 80s saw robust attendance for both teams. Two competitive teams in attractive, fan-friendly ballparks are sure to grow the baseball fan pie throughout the region.

The Giants want the A's out, and anyone who thinks otherwise is deluded.

A's Sink to Giants Level with San Jose Inside Post

San Jose Inside yesterday posted an entry titled "An Open Letter to Larry Baer" asking that the Giants CEO and president acquiesce and allow the A's to move to San Jose. The article was written by Peter Allen who is described as "an independent communications consultant." Peter Allen is actually a communications strategist for Catapult Strategies whose client just happens to be Baseball San Jose -- a corporately funded advocacy group (masquerading as a "grass roots" community coalition) with deep ties to the A's ownership and business interests. The A's and Giants both, given the Giants own "grass roots" ruse with Stand for San Jose, continue to attempt to fool the public through "independent" individuals and groups.

Tuesday, March 13, 2012

Marlins President Puts Foot In Mouth, Zombie Victory Court

We should all be grateful that David Samson isn't president of the A's. The Marlins president was recently caught on video seemingly saying that Miamians were not that smart. In the same piece he also talks about the ballpark process and how he played other cities off Miami in order to secure public funds:

Later, he talked about the moves Marlins leadership made to gain leverage while negotiating for the new stadium. He said he made a big show out of his visit to Texas, purposely buying a cowboy hat and making sure a camera saw him.

But, he said, he really didn’t want to move the team to Texas. His actions were just a threat to help with the Miami deal.

“We know for a fact we can make more money in Miami than in San Antonio,” he said.

He did talk about meeting with the mayor of Las Vegas and throwing out the idea of building a ballpark there with just suites. Those suites would have been sold to the casinos, who would want to keep people away from the ballpark and inside the casinos.

In that scenario, he said nobody would come to the Las Vegas ball games, but he wouldn’t care. Because the team in Vegas still would make money.

The Marlins stadium is an interesting one in that it is located in a city with historically low baseball attendance (largely thanks to playing at a football stadium) and in a neighborhood that is considered low-income, as opposed to the recent trend of teams moving to downtown areas. The Marlins built their stadium in Little Havana, an area with an average household income of just $20,103.

Zombie Victory Court

Victory Court is apparently not dead. This is despite the fact that the old Victory Court plan was killed by the city in January citing the lack of redevelopment funds. Mayor Jean Quan's administration formerly promised to "fast-track" the VC environmental impact review (EIR), but never actually followed through with it. Remember, the Oakland Planning Commission pushed forward (and apparently into a great, dead void) the EIR back in December of 2010. Quan seems to lack any discipline regarding speaking points. Her focus should be the Coliseum City plan.

Friday, March 9, 2012

2016 is the End of Revenue Sharing for A's. national writer Barry M. Bloom earlier this week posted piece a piece on regarding the whole A's-Giants cat fight that contained a passage that piqued my interest:

There has been greater attention paid to issue recently on account of changes in the revenue sharing portion of the new Basic Agreement negotiated between the owners and players last year. The agreement now defines 15 major markets in MLB that no longer will be able to be receivers from the revenue sharing pool by the time the agreement expires at the end of the 2016 season.

The San Francisco Bay Area is one of those markets and the A's are one of those teams, meaning that a decision on their pending move is essential to the franchise's future financial success. If they are turned down, the A's may then begin exploring a move to another market outside the San Francisco Bay Area.

The article intimates that the A's will be cutoff, as part of one of the 15 largest markets, from revenue sharing funds after the 2016 season assuming a new collective bargaining agreement containing an extension is agreed upon. (Note that the current CBA expires post 2016, so a new agreement will be needed.)

Bloom clarified for me on Twitter (@Boomskie; @SmallMarketBall) that this is indeed the case. Here is the definitive tweet from Bloom:

@SmallMarketBall Have confirmed that A's phase in for revenue sharing lasts the length of labor deal or until '16. Doesn't extend after.

Revenue sharing is the financial lifeblood of the franchise. The A's received about $32 million in revenue sharing last season according to owner Lew Wolff. For comparison's sake that's almost half of their $66.5 million payroll in 2011. Using 2010's revenue projections from Forbes (the latest year available) total revenues were $161 million. This means that revenue sharing funds made up just about 20 percent of total revenue. One last item to consider is that Wolff recently noted that the team made a slim $370,000 after in 2012. Without revenue sharing, the A's are in deep trouble.

I found Bloom's comment extremely confusing, as I had read numerous reports that I initially thought indicated the A's would receive the funds after 2016.

Janie Mccauley, Associated Press:

Teams in the largest 15 markets will lose all of their revenue sharing in 2016, except for the low-budget A's if they are unable to build the new ballpark owner Lew Wolff is busy planning for, in San Jose or elsewhere. Wolff certainly hopes it doesn't come to his team still needing revenue sharing in five years.

Dennis O'Donnell, CBS 5

It turns out that the labor agreement also states that teams in the largest 15 markets will lose all of their revenue sharing in 2016, except for the A’s if they are unable to build the new in San Jose.

Jayson Stark, ESPN

One source tells the 15 teams that will be ineligible for revenue sharing by 2016 are the Yankees, Mets, Dodgers, Angels, Cubs, White Sox, Phillies, Red Sox, Rangers, Braves, Nationals, Blue Jays, Astros, Giants and A's. But there's an asterisk attached in the case of the A's. They'll be eligible until their stadium situation gets resolved -- then will join the other teams on this list. So that leaves the Astros, Nationals, Blue Jays and Braves as the teams most affected -- and most motivated to increase their revenue streams over the next few years.

Read all of these carefully though and the only thing that seems consistent is that the A's will get revenue sharing funds through the 2016 season. 2017? No more.

Again, my assumption, and I think the assumption of others, was that the A's "cut out" meant 2016 and beyond, not just through 2016. Given that the A's have to: 1) secure the territorial rights to Santa Clara County; 2) compensate the A-level San Jose Giants; 3) assemble (or have assembled) and purchase the remaining land needed for a San Jose stadium; 4) place on the ballot (via the San Jose City Council) a measure approving public funds being put towards the stadium and have it pass; 5) and actually build a stadium having the park ready by the start of 2017 is no easy feat. The team also has to wrestle with the Stand for San Jose (SF Giants backed-astroturf group threatening legal actions) and the eerily-quiet-of late anti-stadium citizen group Better Sense San Jose. Oh, also did I mention California's notorious habit of delaying projects through citizen CEQA (California Environmental Quality Act) challenges?

Let's say the team is stuck in this mess with no resolution by say 2015. (Seems impossible, but who would have thought the process would have dragged on as long as it has.) A new CBA offers an opening for, yup, you guessed it, that awful word contraction. If contraction were to occur, it might be a logical move to contract the Rays -- who have a bad stadium and a 10,000 year lease. (Note in the article I just linked to that the stadium bonds for Tropicana Field expire in 2016. With the bonds paid off, St. Petersburg has less leverage to claim monetary damages should the team break their lease.) If the A's and the Rays were wiped out, you get a 15-team NL and a 13-team AL. A logical move at this point, given that with the Astros joining the AL West in 2013 and interleague-play guaranteed every week, is the creation of a unified league or radical realignment. Modestly expanding rosters would help appease the Player's Union upset over job losses. Bill Madden, yes I know that Bill Madden of recent Bay Area ire, last year sketched this out.

Remember in Back to the Future when Marty's picture was fading out because he had altered the time-space continuum? Well, for the A's, every day that goes by without a damn decision by Bud Selig, makes the A's look a little fainter.

Addendum -- Bloom tweeted me this morning to point out that the next CBA could contain another revenue sharing cut out for the A's. This is a good point, and one I was aware of and hope in reading this article visitors don't conclude that there is no chance for an extension. However, the probability of such an extension passing muster is anyone's guess.

Thursday, March 8, 2012

Looks Like Another S.J. Election Without Needed A's Measure

A curious piece of perspective regarding yesterday's press release fight between the A's and the Giants is that The San Jose City Council, if the A's want to move the ball along with respect to San Jose, need to eventually -- and by legal requirement -- put to a vote the use of any public funds for a sports facility (San Jose Municipal Code Section 4.95.010, 4.95.020). The deadline for the June 5th ballot is tomorrow (88 days prior to an election, which is referenced in this city memo detailing the pension ballot measure), meaning that the ballpark's measure's timeline now shifts to the Fall.

Remember, San Jose Mayor Chuck Reed had tried to force the issue in June of 2010 only to be rebuffed by MLB who asked that they pull the measure and indicated that they would cover the costs of special election on it.

How such a measure would fare is anyone's guess. The debate needs to be framed about jobs, which construction of the stadium would provide and something that Wolff/Reed haven't done a great job of doing to date. The only polling done was in 2010 and over 60 percent of San Jose residents were in favor of the A's moving, provided the team used to city funds it build or operate the stadium and that taxes were not increased. However, 2010 is a ways away, so it's hard to know if the poll was taken today -- given the city's financial issues, public employee resentment towards Reed and boosted interest in the Giants given their World Series victory -- if the results would be the same.

However, there is no reason, other than risking the A's or MLB's ire, for the San Jose City Council not to put this measure out there. Given the option granted to the A's to buy land and the improvement work on roadways near the proposed stadium, inactivity on this matter is a head-scratcher. An affirmative result makes the city's case that much stronger, and doing so also checks off one more item on the to-do list.

Wednesday, March 7, 2012

Just What Does "Just" Mean? -- Giants Territorial Rights Press Release

The Giants fired back at the A's with their own press release today, explaining how and why they feel Santa Clara County is their territory. They make a historical argument and also insert a puzzling line:

Mr. Wolff and Mr. Fisher agreed to these territorial designations and were fully aware of our territorial rights when they purchased the A’s for just $172 million in 2005.

What in the world is the "just" doing in there? Now, in 1995 we know the Haas family made "concessions" to the Schott/Hoffman ownership group in the hopes of keeping the team in Oakland. However, no real indication has ever emerged that the Wolff/Fisher group was given a discount when purchasing the team in 2005. Could the Giants be asserting that approval of the transfer of A's ownership by the league's owners had strings attached -- such as leaving Santa Clara County alone?

The "just" is also interesting when you think about this story regarding Reggie Jackson's attempts to buy the team in 2005. If the article linked to above is to be believed, the proposed ownership group headed by Jackson was prepared to best any offer by $25 million. That is a lot of money to leave on the table. Further, consider these comments by Selig to Jackson after Jackson found out the team was being sold to Wolff/Fisher:

"Well, there's a lot going on," Selig said. "You don't understand. You need to know the whole story."

The official line from Schott was that an agreement with Wolff/Fisher was in place and that Jackson's bid was irrelevant as a contract was in place. (Mind you Jackson wanted to move the team to Las Vegas, hardly an ideal scenario for Bay Area A's fans.)

What is the whole story?

MLB and its owners meddle with potential ownership groups and frequently sets conditions -- see both the Padres and the Astros of late. Maybe Jackson's more lucrative bid was scuttled by the league in favor of a smaller Wolff/Fisher deal because they made promises not to move or meddle with territorial rights. Maybe they got the team over Jackson for "just" $172 million because they agreed to play nice with the Giants. No one one know, and the ever opaque MLB isn't likely to ever reveal.

Maybe "just" means nothing. However, it seems the Giants are indicating the A's got a deal. What deal no one knows.

About Returning Those Santa Clara Rights to the A's

The A's press release today regarding territorial rights is really more than meets the eye. It was not just a refutation of Bill Madden's piece, it was a strategic piece of communication. This passage, in particular, resonated with me:

The granting of Santa Clara to the Giants was by agreement with the A’s late owner Walter Haas, who approved the request without compensation. The Giants were unable to obtain a vote to move and the return of Santa Clara to its original status was not formally accomplished.

Apparently, the A's are arguing that Haas' grant of territorial rights -- one in which the terms are anyone's guess to this day -- was conditional on the Giants actually going to Santa Clara County. You could interpret this statement by the A's as saying that its time for MLB to restore the original T-rights. This is a slightly different tack than the oft-repeated (even in this press release) concept that the A's and Giants should split the entire market (like the Mets/Yankees, Angels/Dodgers and Cubs/White Sox) as opposed to the current county-by-county apportionment.

A question that begs to be asked, is why has Santa Clara County not been "formally" moved back to the A's? The Giants argument is that their team's current ownership bought the ballpark and invested in AT&T Park partially because the team held these rights. Per former managing general partner Peter Magowan in a December front-page San Francisco Chronicle article:

Investors would not have taken the risk if there was belief that our chief competitor could create a shiny new stadium right in the heart of our fan base.

The "heart of our fan base" comment is interesting. According to the Giants corporate sponsorship demographic information 21.4 percent of their fans come from Santa Clara County -- a greater percentage than any other county, including San Francisco.

The Giants have a huge lease and a still significant payroll, although down from last year. Bear this in mind when considering from the same December 2011 Chronicle piece linked to above the following:

There is thought that, despite the Giants' obligations on their debt service, a majority of big-league owners might be tired of paying the A's hefty revenue-sharing checks - more than $30 million last season. A new stadium in the 10th-largest city in the country probably would put money into the revenue-sharing pot. The Giants argue that they might then be taking out of the kitty rather than contributing. San Francisco must draw 3.3 million to operate at its current level, according to club officials. The Giants sold out every game last season and drew 3.387 million.

21.4 percent of 3.387 million is 724,818. Take that number away from the Giants gate last year -- which is abnormally high based on historical results as they basked in World Series glow -- and it drops the gate to about 2.7 million. One would assume in the "honeymoon" period with a stadium in San Jose the A's, dead last in attendance last season, would draw at least that many additional fans. (The counter-argument here is that more East Bay fans would go to Giants games.) Would a successful A's team in San Jose make the Giants unprofitable?

The Giants are desperate to keep the A's out of the South Bay. Defensive moves such as buying a controlling stake in the minor league San Jose Giants, peppering the area with Giants Dugout merchandise stores and backing the flim-flam astroturf group "Stand for San Jose" all throw up roadblocks for the A's. It's hard to know if the Giants claims of profitability are true. Equally hard to know is if the contract for purchasing the team or the team's long-term sponsorship deals explicitly mention the South Bay.

Also -- It is hard to quantify if the A's or Giants are more popular in the South Bay. (The Giants seem more popular right now everywhere as they recently won the World Series.) This article, while dated, gave an interesting historical perspective on the G-Men's roots in the area.

The Votes for San Jose Might Not Be There

The reality, as Bill Madden recently pointed out in the New York Daily News is that 3/4 of MLB's owners must approve of the A's being granted the San Francisco Giants territory in order to move to San Jose. (This is to say nothing of what "compensation" the Giants may extort demand. There are 30 MLB teams, and 3/4 of that is 22.5. Let's say we round up and you need 23 votes. There are compelling reasons for numerous owners to vote against changing the assigned territories, and the Giants only need six more teams to join them to block the move.

Before we begin, bear in mind two key items, the MLB Constitution (which spells out land territories) the TV blackout chart (determine who sees what game, enormously important in this TV contract crazy era). Further, the A's wouldn't have put out a defensive press release, as they did today, regarding t-rights if something Madden said didn't bother them.

Now, let's take a hypothetical poll: (Mind you these are just reasoned opinions, as no one has the facts on this issue.)

A's: YES -- Obviously.

Angels: YES -- The Angels may one day want to move into to the city of Los Angeles. However, unlike the A's, they already have the rights to do so in a shared territory with the Dodgers.

Astros: LEAN YES -- One market for expansion or relocation remains San Antonio (the 7th largest city in the United States, and both the Astros and the Rangers would prefer this not occur. Neither team has territorial rights to San Antonio but they both share the TV market.

Blue Jays: NO -- The Jays have all of Canada to themselves and would likely prefer not to ever have to share the territory again as they did with the Expos. (Just look at how far they broadcast their games.)

Braves: LEAN YES -- A prime relocation spot for the Tampa Bay Rays is Charlotte, N.C. -- home of their AAA affiliate. The Braves have the TV rights for South Carolina so they might object to a move by the A's as that is an entree for a bid by the Rays to move to the outskirts of their territory.

Brewers: YES -- Bud Selig's old team. While he is officially not involved with the team, you have to think he still has pull. There is also no real threat, at present, to the Brew Crew's territory.

Cardinals: YES -- No logical reason, other than some alliance with the Giants, not to approve this.

Cubs: YES -- No logical reason, other than some alliance with the Giants, not to approve this.

Dodgers: YES -- In bankruptcy, run partially by the league and for sale, The Dodgers are seemingly puppets for Selig's wishes.

Diamondbacks: YES -- No logical reason, other than some alliance with the Giants, not to approve this.

Giants: NO -- Obviously.

Indians: YES -- No logical reason, other than some alliance with the Giants, not to approve this.

Marlins: YES -- YES -- No logical reason, other than some alliance with the Giants, not to approve this.

Mariners: LEAN YES -- Portland is a huge television market for the Mariners. There is an incentive for the M's to let the A's go to S.J. so as to ensure they don't come to Portland (assuming the team or city could build a stadium there). They could also vote no in a defensive move to ward off potential expansion/movement by another club (as in the Rays) by arguing that the PDX market allows them to have a mid-sized market. (This article is a little old, but you can see the M's care a good bit about the Rose City.)

Mets: LEAN NO -- The Mets have a strong incentive in keeping the system as it is. Both they and the Yankees have the richest, most populated territories all to themselves. The NYC/Northern Jersey/CT market could easily support one or even two more teams provided there were stadiums. However, given the Wilpon/Madoff affair, Bud might be pulling ownership's strings as they struggle to avoid selling the club.

Nationals: LEAN NO -- The Nationals do not want a team in Charlotte, where they have TV rights.

Orioles -- LEAN NO -- See the Nationals.

Padres: YES -- No logical reason, other than some alliance with the Giants, not to approve this.

Pirates: YES -- No logical reason, other than some alliance with the Giants, not to approve this.

Phillies: LEAN YES -- A second baseball team in Philly is simply not supported by both history (see the A's) or the region's corporate and population base. If you have ever been to Camden, you will understand why an MLB stadium will not be going up there.

Rangers: LEANS YES -- See Astros.

Red Sox: NO -- Boston, and New England as a whole, could easily support another team -- anathema to the BoSox.

Reds: YES -- No logical reason, other than some alliance with the Giants, not to approve this.

Rockies: YES -- No logical reason, other than some alliance with the Giants, not to approve this. The only caveat here is that it was revealed last summer that the city of Oakland has been paying hired a lobbyist with previous ties to the Rockies. For what, no one knows.

Royals: YES -- The Royals have TV rights for Omaha, which is a long-shot relocation spot but a great college baseball town.

Tampa Bay: YES -- The Rays, however, might use a vote to open a new territorial issue (involving moving to say New York City) which surely owners are loath to address.

Tigers: YES -- YES -- No logical reason, other than some alliance with the Giants, not to approve this.

Twins: YES -- YES -- No logical reason, other than some alliance with the Giants, not to approve this.

White Sox: YES -- We know Jerry Reinsdorf, their owner, is already on board.

Yankees: NO -- See the Mets entry, minus the ownership issues. Ownership may think revenue sharing is "communism" but they certainly do not want a team in their backyard siphoning off fans and millions of dollars.

Count the leans towards their respective categories and you get seven "No's." That would mean the motion was denied unless Selig invokes his secret power, the "best interests of baseball" clause in his contract and overrules everyone.

The issue is bigger than just San Jose, which is partially what Madden was saying. You have to consider the Rays, who are getting increasingly desperate in Tampa Bay and may want to test territorial rights as well. You  have to consider the logical spots for relocation, given stadiums and interest by cities, which include Montreal,  Portland and San Antonio and, of course, the New York and Boston metro areas. Remember too that with TV contract money fueling massive revenue influxes for teams, relocation into land or TV territory of other clubs could cost the teams infringed upon millions.